Barclays 2012 Annual Report Download - page 318

Group Risk is also aligning its vision to support the Chief Executive’s
vision of becoming the ‘Go-To’ bank for all its stakeholders. Group
Risk’s mission is to deliver effective and then efficient risk management
that is consistent with Barclays commercial objectives, through
providing functional capability and control as well as independent and
appropriate challenge at every level, from a single transaction to an
aggregate portfolio view, while ensuring ‘no surprises’. To achieve this
mission the following guiding principles will be followed:
 Effectiveness and expertise;
 Operational excellence;
 Transparency, consistency and control;
 Balance risk and reward; and
 Independence.
Assigning responsibilities (audited)
Responsibility for risk management resides at all levels within the
Group, from the Board and the Executive Committee down through the
organisation to each business manager and risk specialist. Barclays
distributes these responsibilities so that risk/return decisions are taken
at the most appropriate level; as close as possible to the business, and
subject to robust and effective review and challenge. The
responsibilities for effective review and challenges reside with senior
managers, risk oversight committees, the independent Group Risk
function, the Board Risk Committee and, ultimately, the Board.
The Board is responsible for approving risk appetite (see page 39),
which is the level of risk the Group chooses to take in pursuit of its
business objectives. The Chief Risk Officer regularly presents a report to
the Board summarising developments in the risk environment and
performance trends in the key portfolios. The Board is also responsible
for the Internal Control and Assurance Framework (Group Control
Framework). It oversees the management of the most significant risks
through the regular review of risk exposures and related key controls.
Executive management responsibilities relating to this are set via the
Group’s Principal Risks Policy.
The Board Risk Committee (BRC) monitors the Group’s risk profile
against the agreed appetite. Where actual performance differs from
expectations, the actions being taken by management are reviewed to
ensure that the BRC is comfortable with them. After each meeting, the
Chair of the BRC prepares a report for the next meeting of the Board.
Barclays first established a separate Board Risk Committee in 1999 and
all members are non-executive directors. The Finance Director and the
Chief Risk Officer attend each meeting as a matter of course. The BRC
receives regular and comprehensive reports on risk methodologies and
the Group’s risk profile including the key issues affecting each business
portfolio and forward risk trends. The Committee also commissions
in-depth analyses of significant risk topics, which are presented by the
Chief Risk Officer or senior risk managers in the businesses. The Chair
of the Committee prepares a statement each year on its activities (see
pages 56-58).
The Board Audit Committee receives quarterly reports on control issues
of significance and a half-yearly review of the adequacy of impairment
allowances, which it reviews relative to the risk inherent in the portfolios,
the business environment, the Group’s policies and methodologies and
the performance trends of peer banks. The Chair of the Board Audit
Committee also sits on the BRC. See pages 52-55 for additional details
on the membership and activities of the Board Audit Committee.
The Board Remuneration Committee receives a detailed report on risk
management performance from the BRC which is considered in the
setting of performance objectives in the context of incentive packages.
See pages 72-103 for additional details on membership and activities of
the Board Remuneration Committee.
Summaries of the relevant business, professional and risk management
experience of the Directors of the Board are given on pages 67-69. The
terms of reference for each of the principal Board Committees are
available from the Corporate Governance section at: http://group.
barclays.com/About-us/Management-structure/Corporate-
governance.
The Chief Risk Officer is a member of the Executive Committee and has
overall day-to-day accountability for risk management under delegated
authority from the Group Chief Executive. The Group Chief Executive
must consult the Chairman of the Board Risk Committee in respect of
the Chief Risk Officer’s performance appraisal and compensation as
well as all appointments to or departures from the role.
In order to strengthen the Board-level governance over conduct risk
and reputation matters we have created a Board Conduct, Reputation
and Operational Risk Committee in 2013. As a consequence the Board
Risk Committee will have oversight of credit, market and funding risk
matters and will be renamed the Board Financial Risk Committee.
The Chief Risk Officer manages the independent Group Risk function
and chairs the Financial Risk Committee and the Operational Risk
Committee, which monitor the Group’s financial and non-financial risk
profile relative to established risk appetite. Reporting to the Chief Risk
Officer, and working in the Group Risk function, are risk-type heads for
retail credit risk, wholesale credit risk, market risk, operational risk and
fraud risk. Along with their teams, the risk-type heads are responsible
for establishing a Group-wide framework for oversight of the risks and
controls of their risk type. These risk-type teams liaise with each
business as part of the monitoring and management processes.
In addition, each business has an embedded risk management
function, headed by a Business Chief Risk Officer (BCRO). BCROs and
their teams are responsible for assisting business heads in the
identification and management of their business risk profiles and for
implementing appropriate controls. These teams also assist Group Risk
in the formulation of Group policies and their implementation across
the businesses. The business risk directors report jointly to their
respective business heads and to the Chief Risk Officer.
The risk type heads within the central Group Risk function and the
BCROs within the businesses report to the Chief Risk Officer and are
members of the Financial Risk Committee or Operational Risk
Committee as appropriate.
For further details on the management of each of the Principal Risks,
see pages 321-343.
Internal Audit is responsible for the independent review of risk
management and the control environment. Its objective is to provide
reliable, valued and timely assurance to the Board and Executive
Management over the effectiveness of controls, mitigating current and
evolving high risks and in so doing enhancing the controls culture
within the Group. The Board Audit Committee reviews and approves
Internal Audit’s plans and resources, and evaluates the effectiveness of
Internal Audit. An assessment by external advisers is also carried out
periodically.
In addition to the committees shown in the chart, there is a Board
Citizenship Committee which reviews emerging issues with potentially
significant reputational impact and looks at contribution to growth in
the real economy, creating jobs, supporting sustainable growth and
supporting communities through investment programmes and efforts
of employees.
barclays.com/annualreport316 I Barclays PLC Annual Report 2012
Risk management
Barclays risk management strategy continued